E3 Wiki Guide

Microsoft at E3 1998 and 1999: The Dreamcast Years

The Sega Dreamcast was a last-gasp effort by the beleaguered hardware developer to create a console successful in both the Japanese and American markets. After years of poor business decisions surrounding its Genesis, 32X, and Saturn platforms, Sega had created an atmosphere of ill-will among many consumers and retailers. The Dreamcast hardware was designed to rectify many of the problems persisting through previous console generations, and Sega’s marketing department took thoughtful and deliberate steps to repair the company’s public image. Their Japanese advertising campaign went so far as to feature deep and self-parodying apologies to their consumers.

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Among the features of the new hardware was a collaboration with Microsoft, a company previously involved in game development only through the production of a few game titles including Microsoft Flight Simulator and Age of Empires, and through development of excellent gaming controllers like the Microsoft Sidewinder Pro.

Sega and Microsoft worked together to adapt Microsoft’s compact Windows CE operating system to the Dreamcast hardware. This foray marked the first serious experiment by Microsoft in console development. Elements of Microsoft believed that DirectX technology represented an opportunity for Microsoft to make inroads into the growing electronic entertainment industry.

The collaboration was featured at E3 1998 as part of Sega’s presentation of the near-complete Dreamcast hardware. Windows CE components promised an accessible and appealing development target for programmers. In practice, the deal never came to much, and relatively few titles developed during the Dreamcast’s heyday used CE. But the partnership was not without implications for the game industry. While the Dreamcast was ultimately unable to compete long-term with the Playstation 2, the Sega and Microsoft partnership paved the way for the Xbox’s emergence only a few years later as a major player in the console market.

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